Detroit Expected To Exit Bankruptcy Following Emergency Manager Resignation

Detroit may soon be out of the woods: The troubled city is expected to exit bankruptcy on Wednesday. Michigan Gov. Rick Synder approved the move to end the city’s emergency status, following the receipt of a letter of resignation from Emergency Manager Kevyn Orr.

In his letter, Orr recommended that the state end its receivership on Detroit following a number of steps taken to restructure the city’s finances. In response, Snyder accepted Orr’s resignation and his findings.

“This letter approves termination of the financial emergency status, the receivership of the City of Detroit and your contract as Emergency Manager of the City of Detroit,” Snyder wrote.

When Orr was appointed emergency manager for Detroit in March 2013, the city was facing $18 billion in growing debt obligations as well as a deficit of $300 million. The city had been struggling to pay city staff in addition to its mounting debt. As a result, Detroit filed for federal bankruptcy protection in July of 2013.

But the city has turned itself around in a year’s time. A surplus of $100 million is expected next year by Orr, according to WXYZ Detroit. Snyder and Orr are expected to formally announce the end of Detroit’s bankruptcy during a press conference on Wednesday.

Orr orchestrated a number of moves to pull the city out of bankruptcy, including restructuring the city's pension and retirement health benefits and negotiating new collective bargaining agreements with 40 unions in the city. Though the plans surrounding Detroit's bankruptcy focused on the elimination of its debt and deficit, they also provided for reinvestment in infrastructure and funds to clean up the city.

Masterpieces in the Detroit Institute for the Arts, which at one point in the negotiations seemed to be heading for auction, have been protected and will remain in the museum.

Though the city is poised to exit its bankruptcy protection status, a state-appointed financial commission will provide oversight for the city, to prevent another financial disaster. The commission will have the ability to reject spending plans and contracts, according to the Detroit Free Press.

Read Orr’s letter and Snyder’s response below.